Digital Shelf Domination

You walk into a local grocery store and decide it is time to restock your favorite cereal selections. Popular brand names are in your face as you stroll down the aisle – Frosted Flakes, Apple Jacks, Rice Krispies. Did this happen on accident? Were these brands randomly grouped together and haphazardly thrown on the shelf? The answer is no. These cereal brands are almost always located in the middle on the easy to reach shelving units. It is no surprise they are always in the same vicinity of each other because they are all owned by the same cereal super giant Kellogg. But why do you consistently buy the same cereal? You likely bring home these popular Kellogg brands time and time again because you see them first, you are familiar with them, and they are located on the premium shelf space where your eyes, mind, and stomach seem to join forces.

What your eyes usually skip over are the brands of cereal that are placed on the very bottom and top of the shelves such as MOM Brands’ Apple Zings, Mini Spooners, and Golden Puffs. These brands don’t necessarily have the ability to pay for the premium spots and act as fillers for the cereal aisle. The strategy behind Kellogg pushing their cereal competition to the bottom and top shelf space while paying more for the premium locations is an act of product shelf domination. A customer sees them, grabs them without kneeling or standing on their tip toes, throws them in the cart, and “cha-ching” goes Kellogg’s bank account. Paying a few cents more for that premium shelf position just racked up a sale for Kellogg.

Now how does that translate to the digital space? The same strategy that Kellogg uses in the physical retail grocery store of paying more and pushing out their competitors for prime space can be used at the digital level. Staying with the food/beverage category, let’s look at how another company like PepsiCo can use the same method that Kellogg used to create a “digital shelf domination” strategy.

In a hypothetical situation, let’s say the company PepsiCo is looking to implement the digital shelf domination strategy for their different brands of soft drinks. They own various soft drink brands such as Mountain Dew, 7Up, and of course, Pepsi. They decide to rank the importance of their products based on revenue, impressions, clicks, or other various digital metrics, in order of importance in this order: (1) Pepsi, (2) Mountain Dew, (3) 7Up.

These familiar PepsiCo brands could have similar keywords among them (e.g. soft drinks, pop, soda) which can trigger paid search ads. Now PepsiCo can also gauge how much it will cost to run at the top position for these keywords. Let’s say to have the top position for the keyword “soda” will cost PepsiCo a maximum CPC (cost per click) bid of $0.71. PepsiCo then creates budgets for that keyword for their selected brands as follows: $0.71 Pepsi, $0.70 Mountain Dew, and $0.69 7Up.

Now in the event that a customer searches for “soda” in a search engine, not only will PepsiCo have the opportunity to have their own brand, Pepsi, in the top ad spot, but they created the opportunity to dominate the digital shelf with Mountain Dew and 7Up ads generating in the next two positions, which accounts for roughly 63% of Google traffic. A customer is most likely to see the ad (see the popular cereal brands), click on it (put it in the cart), and purchase it through an online grocery distributor like PeaPod thus bringing in a digital sale for PepsiCo.

This also achieves the goal of pushing out any other soft drink companies who can’t afford or do not want pay for the top spots for those highly competitive keywords. Chances are if you searched for “soda” and three different PepsiCo soft drink brands dominated the top three ad spots you haven’t even thought about buying a Coke yet, and that’s a win for PepsiCo by any standards.

01/02/2014 at 10:42

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